For China, the world is its financial oyster

The Middle Kingdom is fashioning a business supply line of glittering foreign entities, writes Eric Ellis.

By Eric Ellis

July 9, 2010 — 3.00am

What is the ''String of Pearls''? If you are a mainland Chinese bizoid it is your toil for the motherland in joining strategic points of the globe, including Australia, to secure China's imminent dominance of the world economy. And in doing so, you will be ably assisted by compliant locals wherever you labour, all eager to help if some quick yuan are to be made.

Quietly, efficiently and persuasively, from East Timor to Greece and myriad points in between, China Inc is building a self-sustaining, vertically integrated network of quasi-sovereign economic entities to secure its supply lines.

But the pearl string's primary intent is to keep China's ravenous economic beast back home fed, while placating those who tend it - a guaranteeing of the proverbial iron rice bowl of 1.3 billion Chinese, lest they get uppity.

But if it happens that good money is made from other customers, apart from one's own, then so be it. Modern China is nothing if not pragmatic.

China Inc's pearl necklace is an officially directed and planned machine, ultimately in the employ of the ruling Communist Party, built by giant government-owned entities of the one-party state, their endeavours lubricated by trillions of China's cash reserves.

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China's string of pearls first began attracting attention in the Bush White House of the early- to mid-2000s, when the US noticed that Beijing was quietly building a presence in ports and sea lanes to and from the Middle East, ostensibly to protect its energy interest and lessen its dependence on Washington's military control of international waters.

There were new naval bases in Bangladesh, Burma, Pakistan and Sri Lanka, poor places largely forgotten by the West but only too keen to accept Chinese largesse.

Beijing placed greater diplomatic attention on strategic choke points in the Gulf and Panama. And it openly worried about the ''Malacca dilemma'', in which China's oil supply from the Gulf could be cut or crippled by incidents in the tight shipping lanes around Singapore, Sumatra and peninsula Malaysia that separate the Indian Ocean from China's pond, the South China Sea.

Now China has extended its string of pearls - and the soft and dollar diplomacy that goes with it - beyond shipping lanes to pretty much anywhere that can satiate its unending resources appetite. In East Timor many of Dili's new ministerial buildings are being built by Chinese grants, companies and labour, as Beijing decides that such generosity will be rewarded by contracts in the undeveloped Timor Sea oil and gas fields.

Much of northern Burma around Mandalay has become a Chinese economic colony, as Beijing extends its reach south-west to the Indian Ocean. Likewise in southern Sri Lanka, where Chinese labour has almost completed a new port and is about to start a new airport and sports stadium.

China is building railways in impoverished Nepal, much to India's chagrin. Once mortal ideological enemies, Indonesia and China are now chumming up as China eyes the coal in Kalimantan. Where Chinese were banned and too often lost, many Indonesian schools now have Mandarin on their curriculums.

On China's western and northern flanks, Beijing arm-wrestles with Moscow over influence in resource-rich Kazakhstan and Mongolia. The Chinese are also pioneers in the more remote and dangerous reaches of Afghanistan, pre-dating the interest around a recent US government study that estimated $1 trillion worth of mineral wealth.

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China is also bankrolling great slabs of the infrastructural development of sub-Saharan Africa, particularly its oil and mineral-rich nations. It is all very impressive.

Which brings us to the World Cup in South Africa. Few sporting entities are as financially savvy as FIFA, and its matches are not just a measure of football prowess but also of who is rising in world business. This year, among the usual Visas and Coca-Colas, Emirates and adidases adorning the terraces, there's a new global face - Yingli Energy Group of China. Call it another pearl in Beijing's lustrous string.